Shipping profitability
The gap between what customers pay for shipping and what carriers invoice you is one of the most consistent profit leaks in ecommerce — and one of the easiest to close.
The problem
Shipping settings are configured once and then left while parcel prices, fuel surcharges, remote-area fees and product dimensions all change.
A free-shipping threshold set when your average parcel was small will send heavy orders out at a loss for years.
How to measure it
Per order: shipping revenue − actual carrier cost (from invoices, including all surcharges) − packaging.
Find the share of orders shipping below cost and which products appear in them.
Recalculate the free-shipping threshold against contribution, not against average order value.
What to change
- ◆Set the threshold above the point where contribution covers the real parcel cost.
- ◆Charge dimensional or heavy-item surcharges where the product warrants it.
- ◆Reduce box sizes and re-check dimensional weight banding.
- ◆Renegotiate carrier rates with your actual volume and parcel profile in hand.
Estimates, not your numbers. Everything on this page is based on public ecommerce benchmarks and the signals a public storefront exposes. It is an indication of where profit typically leaks — not a measurement of your finances. Connect your store to replace estimates with your actual numbers.
Frequently asked questions
How do I know my real shipping cost?+
From carrier invoices rather than rate cards. Surcharges, fuel and dimensional adjustments are usually the difference between the two.
Will raising my free-shipping threshold hurt conversion?+
It can, which is why it should be measured on contribution over a full period rather than on conversion rate alone.